Ginsberg v. Gamson (2012) 205 Cal.App.4th 873

GMSR’s client, Gamson, leased a portion of a commercial building to Ginsberg for the operation of a vintage clothing store. Disputes arose from Ginsberg’s claims that she was entitled to renew her lease perpetually and that Gamson had breached the lease in numerous ways. Ginsberg sued for breach of lease and sought tort damages for what she called “intentional interference with use of premises.” Gamson cross-complained for a declaration that the lease was not perpetual and conferred only a single renewal. The trial court found that the lease was perpetual as a matter of law, though limited by statute to 99 years; the jury awarded $49,100 in damages for breach of lease (against a claim for almost $550,000) and $385,000 in punitive damages. The trial court struck the punitive damages award on the basis that they were not available for a breach of the covenant of quiet enjoyment. The court then awarded over $600,000 in fees and costs against Gamson.

Both sides appealed. In a published opinion, the Court of Appeal reversed the perpetual lease finding and affirmed the striking of punitive damages. As to the perpetual lease issue, it undertook a detailed review of cases from throughout the United States and concluded that the law disfavors perpetual leases; that perpetual rights must be explicitly stated; that the subject lease was ambiguous; and that it therefore conferred only a single right of renewal. As to punitive damages, it held that punitive damages are not available for a breach of the covenant of quiet enjoyment unless it is part of a claim for wrongful eviction, which Ginsberg neither alleged nor proved. The court also reversed the fee award, finding that the changes in the judgment required a reassessment of who was the prevailing party.

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